Barriers, determinants and enablers of market orientation : impact on business performance for small to medium enterprises in South Africa
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Small and medium enterprises (SMEs) are recognised as important for the economic success of countries all over the world because of their contribution to the gross domestic product (GDP), to innovation, to export revenue, to the provision of goods and services to society and large enterprises, to social stability, to employment creation, and to the improvement of economic welfare. These organisations operate within an economic environment characterised by volatility, highly demanding dynamism and tough competition, which often seriously threaten their performance and their survival. The South African business environment in general is constantly changing in the face of an unreceptive economic environment and a subtle political setting which breeds a highly competitive market. For SMEs to withstand the hazards of such a precarious and unfavourable competitive climate, they need to engage in market-oriented strategies. While market orientation research in large organisations has been studied etensively, little attention has been paid to the market orientation of SMEs. Market orientation models have been developed and tested only for developed countries, which recognise the substantial importance of market orientation in the modern business arena. Despite its importance, market orientation and its implementation and relationship with business performance has not been widely researched in developing economies. This need for a market orientation model that is applicable to developing countries underlies this research, the principal purpose of which is to develop a market orientation–business performance conceptual model and test it in a developing country setting. For this purpose, the researcher applied the market orientation constructs as guided by various proponents in the field. Market orientation was identified from the large body of literature and a conceptual framework of market orientation–business performance was proposed. The conceptual framework considered barriers to market orientation, determinants and enablers of market orientation and market orientation with its dimensions (customer emphasis, information generation, intelligence dissemination and intelligence responsiveness or taking action) and economic and non-economic performance as consequences. This framework was then tested in order to identify the link between barriers to market orientation, determinants of market orientation, overall market orientation and business performance. Such efforts have been observed in previous market orientation literature but those studies did not distinguish barriers from determinants. The objective of this study was to establish the relationship between market orientation and the performance of SMEs measured by financial and non-financial measures of business performance. It also sought to ascertain the barriers to market orientation and the determinants/enablers of market orientation and their relationship with market orientation. Another objective was to examine the extent to which SMEs in South Africa have adopted market-oriented practices. A quantitative method was used. Surveys were conducted with 273 SMEs respondents, which were identified using a convenience sampling method. Data from owners/managers of these SMEs were collected using structured questionnaires. This study is different from previous studies on various grounds. Firstly, this study on market orientation is particularly focused on SMEs. Secondly, this study considered barriers to market orientation and determinants of market orientation separately, as having two divergent effects on market orientation. Thirdly, this study considered both the economic and non-economic performance measures as business performance indicators, factorising all the dimensions and modelling the relationship structures. Finally, this study was conducted in a developing economy (South Africa) where limited market orientation studies have been carried out with emphasis on market orientation among SMEs. Quantitative research methods were used to arrive at a valid and convergent conclusion about market orientation and its relationship with business performance. For this purpose, quantitative survey data were obtained from officials of both marketing and non-marketing departments of SMEs in the Vaal Triangle (South Africa). The hypotheses of the study were tested using t-tests statistics, analysis of variance (ANOVA), confirmatory factor analysis (CFA), and structural equation modelling (SEM) goodness of fit. The findings of the study supported the hypotheses of the study and confirmed the applicability of the proposed market orientation framework. The findings also indicated that the market orientation of SMEs in South Africa is determined by four fundamental factors (top management emphasis, market-based reward system, inter-departmental connectedness and management risk posture). In addition, the findings identified four key barriers to market orientation (centralisation and formalisation, inter-departmental conflict, competitive intensity and turbulence). The study also found a significant effect of market orientation on business performance. The findings of this study are consistent with those of previous market orientation studies undertaken in developed countries. At the final stage, the first conceptual model of market orientation–business performance applicable to SMEs in a developing country (South Africa) was offered on the basis of the findings of this study. This conceptual model provides insights and groundwork for further research. Therefore, in order to verify its generic application, it is hoped that this model will be used as a starting point for further studies and be tested in other countries in the world, both developed and developing.